August 6, 2010
By ANDREW KEATTS , The Daily Transcript
Everything that's old is new again. That's what Graham Weiss, owner of residential land-specialist G.W. Realty, expects for the future of his industry. "There's no doubt that from 2006 to 2008, 'land' was a bad word," said Weiss, the "myopically-focused land developer" who started his company at 23.
Now that land is no longer a bad word, he said he's prepared for the industry's short- and long-term realities. In the short-term, he expects to complete the process of flushing REO properties through the system.
"It's not many individual transactions anymore, it's more institution sellers," he said, drinking a cup of yerba mate, a South American tea known as "the drink of the gods."
"Those banks are running out of land. It wasn't a big percentage of their book, so those kinds of things will be flushed through if not by the end of the year, then definitely the end of 2011."
In early July, Weiss was part of a panel discussion sponsored by the Urban Land Institute. The panel was asked what types of deals they expected to be the most fruitful in the coming year. Four of the panelists, including Weiss, said entitlement transactions, also known as mapping deals.
"Hot today is ready-to-go, entitled, finished lots," he said. "Distressed sellers that are unemotional and are flushing their portfolio."
Once those properties are out of the system, one of Southern California's foremost land transaction specialists looks forward to a return to normalcy.
"We'll go back to basics, back to what we've always done," he said, "calling farmers, long-term land investors, long-time family ownership that doesn't sell until the patriarch dies. Old fashioned driving streets, or looking at aerial photos. 'What's going on on the corner of North and Maine? I need to call Bob Smith, who never sold.'"
Sitting behind a rustic desk fit to carry an aspiring author's unpublished manuscript, Weiss shares these expectations surrounded by mementos from his big-game hunting trips: full-sized trophies of a bobcat and lynx dominate a room that also contains two zebra rugs from Zimbabwe, and skulls of red elk from Argentina.
He came to the residential land industry, as most come to their career, almost by accident. He responded to an ad for a part-time job with La Jolla-based Knowles-Avery Realty Advisors while he was still in college in 1989. When it was time for him to graduate a few years later with a degree in finance from San Diego State University, he said he looked around Knowles-Avery and thought he was in the right place.
"I started looking around and I said, 'That guy makes a lot of money. That guy makes a lot of money. I can do this,'" he said.
Weiss cut his teeth at the height of the recession, and specifically the housing downturn after defense contractors left Southern California. He said it worked in his favor, because he was used to the life of a starving college kid and could sustain without money for a few more years. Competitors jumped out of the industry, and he was left to learn the business with a little less competition.
"I had a darn good '92," he remembered. "A 22-year-old kid like me was making six figures. It was like a candy store."
Temecula and the southwest Riverside County markets were his territory, both of which were booming at the time. When Knowles-Avery broke up in '93, he was left with a choice.
"I could go work for a national homebuilder that offered me a job, or I could start my own company," he recounted. "So in December of '93, I formed my own company under the banner G.W. Realty Company."
The next month, he turned 24.
"The way I looked at it, I was going to sell something," he explained. "I'd rather sell $200,000 lots a hundred at a time than $4,000 copiers. Just do the math."
Always entrepreneurial, Weiss said he knew he wanted to work for himself, but it happened sooner than he anticipated.
"Watching bureaucratic issues with clients during this downturn, I'm really glad I work for myself," he said. "There's only one person who can fire me, and that's my wife."
Of the 189 deals Weiss has brokered, 188 have been residential.
"From raw land to finished lots, we understand the entitlement game, we understand the financing, we understand the markets we work in," he pitches.
"We use the analogy that we're matchmakers and marriage counselors. The marketing effort is matchmaking. The escrow process is marriage counseling," he said.
Between entitlement issues and "NIMBYism" (not in my backyard), the unpredictable variables in development separate it from other markets, according to Weiss.
"Because I started in a downturn, I knew this day would come, even when the rest of the world said it would never come," he said.
Now, as the market returns to the state of normalcy to which he's looking forward, Weiss said the characteristics of his sellers would change as the market does.
"I think we'll go to more conventional sales with six- to 24-month escrows to do entitlements," he predicts. "That doesn't mean we won't find a guy with 140 ready-to-go lots who wants to sell them. We'll do those too. But it'll be more the longer-term transactions to go with the ready-to-go transactions."
Weiss is married with three children.
"I'm always focused on being successful in my personal life and being an involved father and husband," he said.
He has no plans to leave land development in Southern California.
"The reason I stick with land and don't go find another niche is because population growth in California is still there. As long as there's places like Buffalo, New York, there's going to be a market to sell land and build houses in Southern California."